Small Business Report Paints Grim Economic Picture
Even before I opened a new economic report detailing how small businesses are faring in the current downturn, I could tell its findings weren't going to be pretty.
The National Small Business Association got its bleak message across through the pictures on the report cover -- a business owner holding his head, a woman looking at her credit card as if she can't decide if it's friend or foe, a close-up of a young man biting his lip, a man holding out his empty pants pockets, and a young woman whispering in the ear of a suit-and-tie executive. Judging by the look on his face, she might as well be saying, "Run, there's a large pack of hungry Bengal tigers right behind you."
When I read on, as expected, the majority of small business owners foresee a flat economy or a recession this year. But on the upside, most of them are confident about the health of their own business, according to the study (pdf) released Monday.
Seventy-nine percent predicted a weak economy but 75 percent expressed confidence in the future of their business, according to the Mid-Year Economic Report, which analyzed responses from a sample of the association's members to questions about their current economic outlook, job and business growth, business financing and other key economic indicators for the small-business community.
Sixty-eight percent of small-business owners reported that Federal Deposit Insurance Corp. insurance will not adequately insure their business accounts, and nearly two-thirds are considering spreading deposits across multiple institutions to reduce their financial risk. The FDIC guarantees up to $100,000 per account holder per bank.
Small businesses are responsible for 93.5 percent of net new jobs since 1989. The research found that net new job growth in the small business community in the past 12 months has remained stagnant overall. Thirty percent of small business owners said they expect to increase staffing over the next year, while 15 percent expect staffing decreases. More than half expect no change.
The pollsters also asked small business owners to name the three most significant challenges to the future growth and survival of their business. The responses were economic uncertainty (53 percent), cost of health insurance benefits (46 percent) and federal taxes (34 percent).
The study also looks at the effects of the weak housing market on small firms, their access to capital and other key items for the business community and the nation.
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Posted by: Marty McEvoy | September 24, 2008 11:43 AM
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